Key Points

• In Curaleaf Holdings, Inc. v. New Jersey Cannabis Regulatory Commission, No. 25-16397 (D.N.J. Aug. 10, 2026), the U.S. District Court for the District of New Jersey held that the National Labor Relations Act (NLRA) preempts the labor peace agreement (LPA) requirement in the New Jersey Cannabis Regulatory, Enforcement Assistance, and Marketplace Modernization Act (CREAMM Act).
• Under the CREAMM Act, cannabis businesses must sign LPAs with labor unions as a condition of maintaining their state license. LPAs may require the business to surrender its rights to insist on National Labor Relations Board (NLRB)-supervised secret-ballot elections, remain silent on unionization, and give up the ability to resort to economic weapons like lockouts.
• The court held the LPA mandate preempted because it regulates activity that the NLRA protects, prohibits or leaves intentionally to the free play of economic forces, reaching a similar conclusion to a federal court last year striking down Oregon’s cannabis LPA mandate.

The District of New Jersey issued a comprehensive opinion on May 27, 2026, and entered final judgment on August 10, 2026, declaring New Jersey’s Labor Peace Agreement (LPA) requirement preempted by the NLRA.

Following the court’s roadmap, dispensaries in states with comparable cannabis LPA mandates may now have greater incentive for mounting their own preemption challenges. The State of New Jersey has indicated that it will appeal the court’s decision to the U.S. Court of Appeals for the 3rd Circuit, making this a case to monitor. However, for now, the court’s decision indicates that cannabis employers in New Jersey that are covered by the NLRA cannot be required to sign LPAs to obtain a license.

Background

In 2020, New Jersey voters approved a ballot initiative legalizing adult-use recreational cannabis and empowering the New Jersey Cannabis Regulatory Commission to oversee the new market. The following year, the state legislature passed the CREAMM Act, which required cannabis businesses to obtain a license. As a condition of licensure, the CREAMM Act required these businesses to sign LPAs with a union and agree to, or make a good faith effort to agree to, a collective bargaining agreement with the union within 200 days of opening.

In 2022, the cannabis company Curaleaf signed an LPA with a union to comply with the licensing requirement. Curaleaf alleged that it “did not want any of these terms” and would not have signed the LPA had it been free to negotiate. In 2025, after the LPA expired without renewal, the Commission issued a Notice of Violation and imposed a $610,000 civil monetary penalty on Curaleaf for operating without an LPA, which equates to a fine of $5,000 per day for 122 days of noncompliance. Curaleaf filed suit in the District of New Jersey, asserting that the NLRA preempted the CREAMM Act's LPA requirement.

Although the CREAMM Act does not define “labor peace agreement,” Curaleaf alleged that standard LPA terms require employers to do all of the following:

• Remain neutral during union organizing.
• Refrain from making “negative statements” about the union.
• Grant the union access to the employer’s premises during work time.
• Allow the union to designate the potential bargaining unit.
• Provide the union with employees’ contact information.
• Announce a neutral position to employees.
• Recognize the union based on a showing of signed union authorization cards rather than NLRB-supervised secret-ballot elections.

Curaleaf also alleged that LPAs regularly required that labor disputes be resolved through binding arbitration and forbade employers from asserting their rights before the NLRB or a court.

Threshold Issues: ‘Unclean Hands’ and Abstention

As a threshold matter, the court rejected New Jersey’s arguments that Curaleaf's claims should be barred by the equitable doctrine of “unclean hands” because cannabis remains illegal under federal law. Specifically, the State of New Jersey argued that the court should not use its equitable powers to strike down the state licensing rules that the dispensary must satisfy to operate in a federally unlawful market.

However, the court held that the unclean hands doctrine requires an “immediate and necessary” relationship between the alleged misconduct and the claims at issue. Because the claims concerned federal labor law preemption, not the legality of the cannabis business itself, the court found insufficient nexus to the federally illegal conduct to warrant application of the doctrine.

The court also rejected the state’s arguments for abstention of federal court intervention in state law matters, finding that neither the pending state administrative proceeding involving Curaleaf nor the nature of the claims warranted federal abstention. Specifically, the court held that the state proceeding over Curaleaf's $610,000 fine was not the type of quasi-criminal enforcement action that justifies federal abstention given that it lacked the hallmarks of a criminal prosecution, including any close relationship to an analogous state criminal law. Further, the court found that the case presented a straightforward federal preemption question rather than the kind of difficult, technical state regulatory issue that may warrant deference to state processes.

The NLRA Applies to the Cannabis Industry

Garmon Preemption

The court held that the CREAMM Act's LPA requirement is preempted under the Supreme Court’s Garmon preemption doctrine. Garmon preemption is triggered when state law regulates activity that the NLRA “arguably protects or prohibits.” Based on this test, the court addressed whether the NLRA applies to the cannabis industry in the first place. The state argued that because cannabis is illegal under federal law, there is no interstate commerce in cannabis and the NLRA therefore does not apply to the industry. The court disagreed, distinguishing between the cannabis product market (which federal law bans) and the cannabis labor market (which federal labor law regulates). Finding that other federal courts have applied the NLRA to cannabis companies, including the District of Oregon in Casala, LLC v. Kotek, 789 F. Supp. 3d 1025 (D. Ore. 2025) and the U.S. Court of Appeals for the D.C. Circuit in Absolute Healthcare v. NLRB, 103 F.4th 61 (D.C. Cir. 2024), the court held that the NLRA at least “arguably applies” to cannabis businesses.

The court further found that the LPA requirement either “short-circuits” normal NLRA processes or requires bargaining over matters not required by Congress, which supported its Garmon preemption holding. For example, the court noted that the LPA requirement denies employers the option to insist on an NLRB-supervised election when employees seek representation and compels bargaining over a topic that federal law makes optional, namely, signing an LPA.

The court also rejected New Jersey’s argument that the “local interest” exception to Garmon preemption applied. The court noted that that exception, which applies to matters “deeply rooted in local feeling and responsibility,” has historically been limited to conduct involving violence, threats of violence, intimidation, destruction of property, and trespass. The court found that the CREAMM Act’s LPA mandate was not related to violence or threats to the public order that would make this exception applicable.

Machinists Preemption

The court additionally found the LPA requirement preempted under the Supreme Court’s Machinists preemption doctrine, which precludes state regulation of aspects of labor-management relations that Congress intended “to be controlled by the free play of economic forces.” The court found that the LPA requirement forced employers to give up their right to utilize economic weapons, such as locking out employees, that are “part and parcel” of the bargaining process. The court rejected New Jersey’s argument that because cannabis is federally illegal, there is nothing “unregulated” about the cannabis market, finding instead that the “balancing that Machinists seeks to protect refers only to the labor relations context, not to regulation of the underlying market.”

Implications for Employers

This decision follows the District of Oregon’s 2025 decision in Casala, LLC v. Kotek, which enjoined a similar Oregon state LPA requirement on preemption and First Amendment grounds.

For cannabis employers, the Curaleaf decision means that New Jersey cannot lawfully enforce its LPA requirement, at least as applied to businesses covered by the NLRA, and similar requirements in other states could now be subject to heightened legal challenge. The court’s ruling shows that:

• The NLRA’s reach extends to New Jersey’s cannabis industry. According to the court, even though cannabis remains illegal under the federal Controlled Substances Act, other federal law (the NLRA) protects the rights of workers and employers in the cannabis labor market.
• The court made clear that New Jersey could not force Curaleaf to sign LPAs as a condition of licensure.
• Employers may be encouraged to file preemption lawsuits in other states to insist on NLRB-run secret-ballot elections, to exercise economic weapons, and to decline to negotiate over permissive subjects of bargaining — rights protected under the NLRA that state cannabis LPA mandates may force them to surrender.

Employers in the cannabis industry and in states with LPA mandates should consult experienced labor counsel to evaluate their rights and develop strategies in light of this evolving legal landscape.

For more information, please contact Mark Eskenazi at 202.461.3109 or meskenazi@foxrothschild.com, or another member of Fox Rothschild’s Labor & Employment Department. Listen to Mark's podcast, “Labor Law Lineup,” on Spotify, Apple or wherever you get your podcasts.

This information is intended to inform firm clients and friends about legal developments, including the decisions of courts and administrative bodies. Nothing in this alert should be construed as legal advice or a legal opinion. Readers should not act upon the information contained in this alert without seeking the advice of legal counsel. Views expressed are those of the author and not necessarily this law firm or its clients.